Technology is no longer the key disruptor:
Your Business Model is—So it “better be good”

David Skok is one of my favorite business writers because he tends to change the way I think about my business. He helps bring new ideas to entrepreneurs like me, who barely have time to do our jobs — let alone keep up with the latest in business model innovation. I know when I visit a Skok blog or SlideShare, I’m not wasting my time.

Take this recent statement from David in a SlideShare titled, “Business Model Innovation: The New Trigger for Great Start Ups”: “Unlike in the past where technology innovation was the primary driver of startup innovation, in the last ten years it has frequently been innovation in new business models that has caused the disruption to create the opening for new companies.”

The 79+ page Slide Share brought me to some great conclusions about where my company might be headed. David uses awesome examples to show how the “business model as innovator” concept works in practice. Here are some of the most valuable insights:

1. Watch your CAC (cost to acquire a customer) – According to Skok, start-ups using the new model—spending money to get customers to your website and then monetizing the site with offers, etc—doesn’t take into account how much money it will cost to acquire not only a visitor– but a real customer. By monetizing a portion of the customer base and using free software to acquire customers cheaply, startups can keep their CAC more manageable—and make more money.

I learned this lesson the hard way. I loved attending the big, fancy conferences when I first started my company. I thought I would network with the big money clients—then, once they met me, of course they would hire me—voila! That $2,500 conference fee paid for itself.

When I finally broke down the average number of clients I obtained from attending twice a year, every year for three years, I came up with five clients that yielded about the same amount of money as I spent on the conferences. I deicided to cut down attendance to once every two years and spend my new business money on people who were already in my network.

I still go because I love to learn about my discipline. I just don’t spend as much in acquiring customers there. And even though $5,000 a year doesn’t seem like a lot to you, it was a lot of money to me back then. Today, I’d rather spend it on something that yields client contracts on a regular basis.

I see so much content “thrown at the wall until something sticks” by start-up companies. They “know” they need to be certain places online but they don’t pay thoughtful attention to what they want out there; who needs to be saying it (I love customer testimonials as a buyer and as a business); and where they need to be (to build a social following) basically, how to “educate and entertain.” Spend a lot of time on this part. It’s worth it.

3. Be a “New World” Business – The older business model had us charging for everything, even demos. Demos and trials are still widely used. But to move into the “new world” of innovative business models, you have to figure out how to simply give it away. For free. And only monetize a fraction of your customer base to make money.

Granted, your customer base has to be pretty big for most of us to afford the mortgage, the car, and our kids’ tuition with this model. But if you are watching your CAC carefully; writing and posting targeted content in accordance with how your buyers really behave (and not how you wish they would); and figuring out how to give it away while monetizing enough to feed your family and please your investors—Skok says you can get there.

Run a SWOT to unlock your brand promise and build better customer relationships

When you are planning how to reach out to the marketplace, there are some newer marketing theories that can be the key to building meaningful relationships with your customers. Yes, I said marketing theories. These are the rare theories that can be tested and put into practice immediately. For me, the most impactful of these was shared by Simon Sinek during a Ted Talk. He said: “Your consumers don’t buy what you do –they buy why you do it.”

This amazing quote came to my attention through a really cool blog by Michael Brenner. In it, he offers several insights about how to plan to reach your customers—to deliver your company’s core belief to them rather than just your product or service. He tells us brands are three times more successful when they promote their raison d’etre – and how to personalize your marketing efforts to potentials using your “brand purpose.”

How would I do it? I would use CBM’s SWOT analysis tool to identify my company’s Strengths Weaknesses Opportunities and Threats. After delineating these, I’d look for ways to deliver them to my audiences. Start a conversation. Build a relationship. Let me break it down:

Worth it to My Reader My core belief for my communications company is—everyone needs to hear my story (content) because I don’t waste their time with stuff they don’t want to hear. Whether it’s a technological white paper on manufacturing IT or a media pitch for a pair of cool headphones, I have done my research. I know who I am talking to. My strength, then, is making sure my content is targeted and meaty enough for the people I get it in front of- so that it won’t waste their time. That’s the S in my SWOT.

Too Cute By Far My weakness is my ability to write fun, fearless copy. Yup—I often refuse to make it dull or clog it up with business speak to please a review board at a client company. In all fairness and in their defense, they are in the serious business of selling their products or services through the content I write. The problem with that is this: Sometimes, their audience expects the material to be cut-and-dry, with dry being the operative word. I learned that not everyone has to be amused while swallowing good, important information. I got myself a good editor at an hourly rate and told her about this issue of mine—we even have a code-edit for when she spots me being too “cute” for certain clients. That tells me to tone down a phrase and make it more business-like for my serious clients. I can usually edit myself with these kinds of clients because I am an excellent writer—and I still don’t bore people because I use juicy verbs and shun the passive voice. Weakness transformed!

Opportunity, Don’t Knock It The opportunities in the way I present my core belief—you need this, you should read this, you’ll be happy you did — have given me an edge in certain kinds of content—blogging is one and social media is another. My colorful use of language shows my clients that I can excel in these arenas—even business-to-business blogs and social networks are people-to-people, aren’t they? If I continue to sell my blogging and network posts and broaden my reach to new prospects, I can realize a great jump in profits—people need lots of blogs and tweets/shares these days — they’re among the most in-demand content I write.

Why Am I Not Scared? The Threat to my r’aison d’etre? The economic realities that my clients face as small businesses serving medium-to-large companies. Their marketing officers are suffering from “next big thing” fatigue—they are expected to jump on every social media or newest flavor of content bandwagon and then show an ROI on these untested tactics. The threat to my core belief—you need this, you should read this—is that it doesn’t get to the person who’s ready to hear it—or they can’t find it—or the company that hired me to write it doesn’t know where to put it. Or worse—we can’t prove that it worked. This threat is met square on by me—by being up-to-date on cost-effective content strategies and educating my clients on these. By becoming an ROI-KPI detective about these approaches to ensure that they can explain them to their bosses. And by really, truly knowing their customer wants and needs before I put one finger on the keyboard. See, that wasn’t so scary.

You can probably see yourself in some of my strengths, weaknesses, opportunities and threats. Run a SWOT on the why of what you do before you sell your what. It’s key to building a lasting relationship with your customers.

Introduction to SWOT

What is a SWOT analysis? It is a simple method of planning that compartmentalizes important internal factors (strengths and weaknesses) and external factors (opportunities and threats) that an organization faces. Simply stated, it is a highly effective planning technique to identify actions that will have a positive impact on business strategy and outcome.

The items revealed in your assessment should be looked at as more than just a list of things you hope to accomplish or may eventually find the time to develop. They are actionable results to drive specific business change. Organizations that ignore or fail to understand, evaluate and leverage their strengths, weaknesses, opportunities and threats will find themselves blindsided by trends in the marketplace and their competitors.

Why Use SWOT?

As a method to improve, re-evaluate, revise or correct an existing offering.

To identify a new solution to an existing problem.

To uncover potential business challenges.

To proactively respond to changes and trends.

To better understand how you and your competitors are perceived in the marketplace.

When to Use SWOT?

As a way to identify and improve on weaknesses, turning them into strengths.

To determine areas where opportunities exist and how best to exploit them.

As a tool to help expose and neutralize risks and threats.

To better understand your business environment and competitive landscape.

Types of SWOT

SWOT is valuable in gaining perspective on one’s position within an environment. It’s a high level examination often performed early in a project, not as a detailed analysis. It’s best used to understand conceptual or strategic needs instead of tactical execution. Here are some typical types of SWOT analysis:

Business Team SWOT – A SWOT analysis performed by an executive team, product team or other business group.

Product Launch / Re-launch SWOT – SWOT analysis is commonly used in planning and positioning a product or service offering in the marketplace.

Business Launch – SWOT analysis helps Entrepreneurs identify opportunities and position their offering in the marketplace. It’s a key step in building a business plan.

3rd Party (external) SWOT Analysis – An outside inspection can often uncover gaps or deficiencies in strategy. SWOT is an effective tool to gain that external perspective.

Personal SWOT – This frequent use of SWOT analysis is to perform a self-assessment of one’s skills and career
SWOT can be applied to products and services, or departments such as sales, marketing, operations, and financial management.

SWOT as a Business Tool: Strengths and Weaknesses

While SWOT is a highly effective, simple means to gain strategic insight and develop business strategy, it’s important to understand the strengths and weaknesses of this approach. This business tool is most easily described as both simple and flexible. However those two strengths can also be liability.

First, the simple, four quadrant layout of SWOT implies that each quadrant has equal importance. Yet this is rarely true in a given SWOT analysis. For example, when looking at business strategy, opportunities and strengths often far outweigh the importance of weaknesses. Reversing this logic, the opposite may be true when looking at a product relaunch.

Second, it’s not always a straightforward task to transform the results of a SWOT analysis into measurable actions. One challenge is narrowing the list of items in each quadrant to a reasonable number of items where the resulting actions can realistically be addressed.

Getting Started with SWOT

How does one do a SWOT analysis? For each of the four quadrants, identify and rank the points that best describe your situation. It’s often best to prioritize and limit the number of items in each quadrant to keep the SWOT analysis manageable.

Strengths – These represent internal factors (tangible or intangible) that are within your control which impact your organization. Following are examples of questions you could ask to determine your strengths.

What are one’s internal strengths or areas of excellence?

What areas are most profitable to your business?

What types of resources are available to you? (i.e., people, technology, reputation, skills, education, etc.)

Where does one have a unique advantage or significant head start?

What things are exclusive to your organization that add value or give you a competitive edge?

Weaknesses – Are also within your control, but these factors prevent you from successfully maintaining a competitive edge. Look for things you can do that will aid in achieving your business objective. Following are examples of questions that will help determine your weaknesses.

What areas leave you most vulnerable?

Which areas of your business cost you the most time and money?

What things within your control can you improve on?

What factors create a competitive disadvantage for you?

Opportunities – Are factors external to your business that when identified will help you understand the market and environment and position you to profit from areas exposed. Following are sample questions to help you determine areas of opportunity.

Threats – These are factors outside of your control that represent risks to your business and strategy.

Which competitors are coming on strong?

How will economic issues impact our ability to thrive and expand?

Where are market trends working against us?

What are the greatest risks presented by competitors, marketplace trends including consumer behavior?

The Right B2B Marketing Strategy for Your Business

There’s no question that the right marketing strategy for your business will depend on your brand, your business capabilities, your solutions, and most importantly, your market. But knowing the distinct trends can and should influence your marketing priorities.

Additional SWOT Resources

http://centerforbusinessmodeling.com/wp-content/uploads/2014/12/swot-analysis.png180180Michael James Smithhttp://centerforbusinessmodeling.com/wp-content/uploads/2014/05/cbm-logo-lg-300x300.jpgMichael James Smith2014-12-06 08:16:352014-12-07 11:36:31How to do a SWOT Analysis [Infographic]

SWOT analysis came from research conducted at Stanford Research Institute between 1960 and 1970 and stemmed from the need to find out why corporate planning failed. Fortune 500 companies funded the initial research to find a way to overcome poor planning. SWOT analysis was designed to provide a subjective assessment of data that is organized by the SWOT format into a logical order that helps understanding, presentation, discussion, and decision-making. The four dimensions are a useful extension of the basic list of pros and cons that many of us use to guide decisions.

According to the creators of the method, SWOT essentially tells you what is good and bad about a business or a particular proposition or category. A SWOT analysis always focuses on four categories:

Strengths – What are we good at; where do we excel; where do we have a unique advantage or a significant head start over the competition?

Weaknesses – What are we not good at; where are our vulnerabilities; where are we less than adequate; where have we been ineffective in comparison to the competition?

Opportunities – Where can we take advantage of current market trends; where can we exploit our strengths and the competition’s weaknesses; what are the possibilities for a big win; what excites us the most?

Threats – Which of the competitors are coming on strong; where are the market trends working against us; what are the gaps that can be exploited by our competitors; what scares us the most?

At the first stage of the process, you are only asking questions, you are not attempting to create action items or set strategic direction. Do not draw conclusions at this point and do not make any business decisions based on your answers. The point is to get all of the relevant input out on the table before you attempt to organize the data and use it for planning purposes.

It’s important to note that every SWOT analysis I have participated in has generated far more data than it is possible to work with. After the initial brainstorm and data collection phase, you will need to synthesize the data into the most important and relevant points.

SWOT analysis is a valuable tool in gaining perspective on one’s position within an environment. Whether you’re looking to launch a product, start a business, improve marketing performance, or conduct a personal career assessment, SWOT is a simple method to gain strategic insight. Let’s look as some of the critical success factors in executing a successful SWOT analysis.

SWOT preparation

Alexander Graham Bell once said, “Before anything else, preparation is the key to success.” That’s certainly true with SWOT analysis, particularly if you will be engaging stakeholders in the process. Here are some example questions to help get started.

What are your goals? What do you seek to achieve as a result of this exercise? Are you looking for a macro level perspective affecting the entire company or a micro level view of a department?

How broad or narrow is the scope of your SWOT analysis? It helps to establish the scope and communicate that with the participants up front.

What types of questions to you seek to answer?

Who are the desired participants? Is this a solo exercise or do you seek to engage a team of stakeholders, perhaps the executive team or a product team. If it’s a team SWOT analysis, here are some additional planning considerations.

What are the analysis guidelines? How are you going to keep this a constructive, candid exercise and yet avoid negativity?

Who will lead and facilitate the exercise? It’s often helpful to add an additional meeting facilitator to guide the discussion.

What location will you use?

How will you maintain the focus of the team? One consideration is meeting logistics, including duration, breaks and food.

Develop an initial set of thought provoking questions for each of the four SWOT quadrants. These prepared questions will help you jump start the discussion.

Conduct the SWOT analysis

Since SWOT analysis typically starts as a brainstorming exercise, it’s valuable to have guidance and facilitation to ensure a positive outcome. Structure helps guide the process.

Establish the analysis guidelines, sharing the goals of the SWOT exercise, the mechanics of how this brainstorming event will be conducted and logistics such as the length of the exercise.

Encourage and record all ideas. Use prepared questions to help stimulate discussion and encourage ideas.

Focus the discussion on identifying underlying factors, not symptoms.

Prioritize and weight the number of items in each SWOT quadrant. By sorting the list, one can focus in on the most critical factors. While numerous elements in a quadrant appears impressive, the analysis is more effective with a more manageable number of results.

Translating SWOT analysis into results

Now that analysis is complete, it’s time to convert the analysis into actionable tasks. If this SWOT analysis is a planning activity, the next steps may be to modify the impacted plan. Or if the analysis is part of a refocus effort, the result may translate into operational change. Regardless of the type of SWOT analysis, value is achieved by identifying, assigning and following up on the resulting actions.

Looking back in the context of the goals for this exercise, what are the key actions?

Who is assigned which actions?

What are the expected timeframes?

How are the results to be measured?

SWOT analysis is a powerful, simple approach for business strategy. I hope this SWOT analysis checklist helps you execute your successful SWOT analysis.

Additional SWOT Resources

To help you get started faster, the Center for Business Modeling has developed a comprehensive SWOT analysis tool. Containing SWOT templates for five business areas and over 128 sample questions, this sophisticated spreadsheet helps businesses focus on completing a successful analysis. Click here to Learn more.

Like most people, I have tons to do and not a lot of time to do it. There are just too few hours in the day so I often put even the most crucial activities on the back burner. That’s why I am so grateful for CBM’s SWOT analysis tool. As a small business owner, I don’t schedule time to check in on my marketing plan. (I’ll bet some of you reading this are getting a very guilty look on your faces right now!)

Maybe, like me, you have a pretty good marketing plan, one that you work from because in any given calendar year, certain activities on your plan keep the cogs of your business turning. But when was the last time you took a clear eyed-view of your Strengths, Weaknesses, Opportunities and Threats as they related to your plan? Have you really revisited the plan in light of these? If not, face the music and grab this tool.

SWOT Analysis Template

The CBM tool is easy to use and intuitive. That’s not to say it’s needlessly simplistic. For example, I was able to look at my products and services in several different ways. I was able to understand that although I had a plan for putting these in front of my prospects, my understanding of what competitors were doing in this arena was foggy at best. I was missing a key opportunity to grow my business by virtually ignoring my competitors. Danger, Will Robinson!
Understand, too, that in most cases, growing my business (and yours) depends mostly on the right networking, which costs money. How much were my various networking activities costing me and which products and services was I highlighting while engaging with prospects? What dollar amount should I be spending for my networking investment based on which services were selling? Were these services the most profitable or were they low-margin services? The CBM SWOT tool uncovered all of these questions and more. Once I was able to hone in on where I should be spending my time, I was able to use my time better.

The fact remains—no SWOT is a “one and done” proposition. But the CBM SWOT analysis tool can grow with me. Once I solve this first batch of “problems” I can check back in on my first analysis and see where my next batch of challenges will be. I can use this tool to virtually guarantee that I am doing everything in my power to keep my business volume cranked up to 11.

http://centerforbusinessmodeling.com/wp-content/uploads/2014/09/swot-template1.png180180Patty Tomskyhttp://centerforbusinessmodeling.com/wp-content/uploads/2014/05/cbm-logo-lg-300x300.jpgPatty Tomsky2014-09-23 22:23:052014-09-23 22:23:05Use SWOT Analysis to Crank up the Volume on Your Business